Ezel / IRS Rulings / 200928037

CCA 200928037: Long-unpaid intercompany receivable is passive for estate-tax deferral

Number
200928037
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Extension of Time to Pay Estate Tax
Topics
Procedure, penalties, and administration
Code sections
§ 6166
Ruling dated
May 20, 2009
Publicly released
July 10, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

A decedent's company had supplied operational services, administrative support, equipment use, and other services to the decedent's son's company over 10 to 15 years. The son tracked what his company owed but made no payments, allowing the receivable to accumulate. Chief Counsel reasoned that the receivable was not needed to conduct the father's active business. It therefore qualified as a passive asset under section 6166, which matters when determining eligibility to defer estate tax attributable to a closely held business.

Ruling snapshot

  • Question: Is the accumulated amount owed by the son's company a passive asset for section 6166 purposes?
  • Outcome: Advice given that the receivable is a passive asset
  • Key authorities: IRC § 6166

Full text (IRS public release)

ID: CCA_2009052008170220 Number: 200928037

Release Date: 7/10/2009

Office: --------------

UILC: 6166.00-00

From: ------------------

Sent: Wednesday, May 20, 2009 8:17:43 AM

To: --------------------------

Cc:

Subject: Section 6166 "Passive Asset" Determination ---------

This e-mail is to confirm the conversation we had earlier this week. You asked whether money owed by the decedent's son's company to the decedent's company over 10-15 years of using the father's company's operational services, administrative support, equipment use and services is a passive asset. The son kept track of the money he owed the father's company, but did not make any payments. A “passive asset” is defined in section 6166 as any asset other than an asset used in carrying on a trade or business. Money owed by the son's company to the decedent/father's company that has been accumulating over so many years is not as an asset needed for the conduct of the father's active business. Therefore, the asset is a passive asset under section 6166.

Please let me know if you have any questions.

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